Submissions – Education
SACE Subject Consultation – Economics Renewal

1.1 The Interests of the Reserve Bank of Australia

As an economic agency and policymaker, the Reserve Bank of Australia takes an interest in
developments affecting Economics students and educators and has recently put in place a public
education program designed to support them. The Reserve Bank is committed to this program
because it has observed a significant decline in the size and diversity of the student
population in Economics – both at a secondary and tertiary level.

Teaching Economics has many social benefits. First, there are the benefits of economic literacy
in the wider community, with teaching Economics at secondary schools exposing a potentially
large group of citizens to economic ideas. Second, there needs to be a talented and diverse pool
of economists from which organisations can recruit, particularly those organisations that make
public policy decisions. Third, the analytical and problem solving skills acquired in the study
of Economics are well suited to the changing nature of work.

The renewal of the South Australian Economics subject outline presents an opportunity to expose
secondary school students in South Australia to the key principles of economics and the
relevance of the subject – both in their daily lives and as a field of study. However, an
important issue for consideration in the subject renewal is whether the proposed changes are
sufficiently well aligned with student capability and interest, along with teacher proficiency.
Should this not be so, there is the risk of further falls in Economics enrolments or
disengagement with the subject among students in South Australia, a state where Economics
enrolments are already unusually low.

1.2 Trends in Economics Enrolments in South Australia

The Reserve Bank has conducted analysis of the landscape of Economics enrolments in Australian
secondary schools, including a case study for New South Wales that used detailed unpublished
data. The theme of this analysis is that, over the course of a generation, there has been a
dramatic fall in the size and diversity of the Economics student population at secondary schools
(with similar trends evident at university). Using less detailed, publicly available data for
South Australia, we are able to draw similar conclusions about Economics enrolments in that
state.

Graph 1 shows Year 12 Economics enrolments in South Australia and the rest of Australia from 1993
to 2017, expressed as an index.[2]
It highlights the sharp fall in Economics enrolments that has occurred nationally and was most
pronounced in the first half of the 1990s, when vocationally oriented business subjects were
introduced. However, Economics enrolments in South Australia have fallen by proportionately more
than those in the rest of Australia. The fall in South Australian enrolments hastened in the
early 2000s and again in 2011 when changes to the total number of credits required to achieve an
ATAR, combined with the introduction of the compulsory Research Project, encouraged more Year 12
students to study four rather than five subjects; fewer students choose Economics.

Graph 1

Graph 2 shows the number of Economics enrolments in
government and non-government schools in South Australia (since 1996). With Economics once being
readily available as a subject at government and non-government schools, enrolments were
reasonably high at schools in both sectors – albeit higher at non-government schools.
There has since been a general fall in Economics enrolments, but the fall in enrolments in
government schools has been more pronounced. In 2017, Economics was offered at only four
government schools in the state, significantly reducing the subject's availability to a
large part of the student population in South Australia.

Graph 2

Graph 2 also shows that while the absolute number of
Economics enrolments in non-government schools exceeds that for government schools, there was an
abrupt fall in the late 2000s. This followed the changes to credit requirements for an ATAR and
introduction of the Research Project, with non-government schools displaying a proportionately
greater response than government schools to the change in incentive to offer Economics. These
sectoral trends in enrolments have weighed on both the size and the diversity of the Economics
student population in South Australia.

Another dimension of diversity is gender. Graph 3 shows that enrolments in Economics by female
students in South Australia have fallen significantly over the past two decades. The decline
broadly mirrors the pattern throughout Australia, although the ratio of female to male Economics
students in South Australia has been consistently lower than the ratio nationally.

Graph 3

1.3 Attitudes to Economics

Since the establishment of its public education program two years ago, the Reserve Bank has
consulted widely with educators, education authorities and students (including in South
Australia). Feedback suggests that student engagement with economics is relatively low. One
contributing factor has been the largely benign economic environment in Australia for the past
25 years or so. There has not been the same scale of national debate about economic issues
as in the 1980s and early 1990s, when recession was a lived experience for households, and when
financial deregulation, labour market deregulation and tariff reform were part of national
conversations.

However, it is also the case that economics has an ‘image problem’. Many students do
not understand what economics is and how it might be relevant to them. As an analytical subject
with a quantitative element, Economics is often perceived as being difficult to learn. It is
also described as difficult to teach – especially given the limited teaching resources
with an Australian context and the challenge of incorporating changing economic conditions into
lesson plans. In contrast, business-oriented subjects are widely perceived as more employable,
easier for students to learn and easier for educators to teach, especially those teaching out of
field (as they have fewer concepts to explain and more readily available content). In addition,
there are deterrents to female students who see a lack of diversity in economic role models and
textbook examples. There is also the suggestion that female students are more risk-averse than
their male peers in considering the returns to studying Economics. Together, these attitudes
have been associated with a displacement of economics by business subjects.

1.4 How the Labour Market Values Economics

Decisions about subject choices at school are influenced by the returns to studying a given
subject. Labour market outcomes for Economics graduates suggest that perceptions about the
returns to studying Economics are not well founded. Employment rates and starting salaries for
Economics graduates have been at or above average in recent years (Graphs 4-5). Furthermore,
compared with business graduates, Economics graduates have similar employment rates but higher
wage outcomes, with the analytical skills that are acquired from studying Economics being
rewarded by employers.

Graph 4

Graph 5

The actual returns to students who study
economics, and its wider social benefits, speak to the merit of ensuring that the Economics
subject renewal fosters greater student participation.

2. Considerations for the Economics Subject Renewal

2.1 Engagement and Capability

The renewed Economics subject outline provides an opportunity to demonstrate the relevance of
Economics and encourage engagement with it by students and educators. The Bank's
interpretation of the intention of the new subject outline is that it seeks to develop students'
analytical skills so that they can undertake economic enquiry, pose economic questions, and
consider the answers to these questions in terms of both economic theory and data-based
evidence. The Bank supports the notion expressed by SACE to educate Economics students so that
they ‘think like an economist’.

However, given the critically low level of enrolments in Economics in many secondary schools
(particularly government schools and less well-resourced non-government schools), an important
question is whether the new subject outline is consistent with: the capabilities of most
students and teachers; an appropriate coverage of topics; the ability of these topics to be
reasonably assessed; and the need for student engagement.

On matters of curriculum and pedagogy, the Reserve Bank takes strategic advice from its Educators
Advisory Panel. The Bank's public education team meets with the Panel and discusses a broad
range of issues of relevance to the Bank's support of the economics student and teaching
body, including noteworthy changes to curricula. At a recent meeting, the renewal of the South
Australian Economics subject was discussed. The Panel noted that the proposed Economics subject
outline introduces:

econometrics

applied statistics

game theory

a significant increase in the range of capabilities that students are required to demonstrate
and that teachers are required to assess

a substantial increase in the range of possible lines of economic enquiry.

In this submission, the Reserve Bank offers high-level collective feedback from the Panel as well
as its own perspective as an economic agency with an interest in the health of the economics
student and teaching body. (The South Australian Panel member has provided their own submission
to SACE, and other Panel members have also made submissions or responded to SACE's survey
about the subject.)

The collective view of the Panel is that the shift in focus in the proposed South Australian
Economics subject outline towards econometrics, statistics and game theory would adversely
affect engagement and exceed the capabilities of most students and teachers (especially those
teaching out of field). These components would introduce content that is typically taught at
university, and typically taught separately from those subjects that establish foundation
knowledge in economic principles. Furthermore, Year 12 students would be expected to grasp this
content having only been exposed to 5-week blocks of economics, business and accounting,
intermittently during Years 7-10. The new elements of econometrics, statistics and game theory
are not included in Stage 1 of the subject, yet are named as foundation knowledge and skills for
the economic thinking to be developed in Stage 2. While quantitative methods like econometrics
are important tools for professional economists and those undertaking economic research, of
greater value to the secondary school student is foundation knowledge in economic concepts and
their application to the world around them.

The Panel is of the view that the additional quantitative and theoretical subject content would
significantly exceed the readiness and capability of most students to learn and the proficiency
of most secondary school teachers to deliver. This would be likely to deter students from
taking, or successfully completing, Economics in South Australia at a time when enrolments are
already at a critically low level.

The Panel is also concerned about the extent of choice in economic content and limited context
and direction for managing that choice. It considers that this situation would be difficult for
teachers to navigate (including inexperienced teachers and those teaching out of field).
Similarly, it would be difficult for students to undertake self-directed learning. This extent
of choice could result in wide disparities in course coverage and approach, rather than ensure
that students graduate with a common core of knowledge in economics.

In addition, the Panel does not consider the learning requirements in the new subject outline to
be adequately explained, creating ambiguity as to how they will be assessed. Regarding the
assessment instruments, the Panel is concerned that they require students to complete many short
exercises in response to tasks that are ambitious in their requirements for meaningful
completion.

In trying to equip Year 12 students to ‘think like an economist’, the subject outline
appears to be introducing a truncated version of most core topics that a student would undertake
when studying Economics at university. Given the dramatic fall in size and diversity of the
Economics student population, and the social returns to teaching economics, the Reserve Bank
considers it important that a renewed Economics subject outline establishes foundation knowledge
in economics at an appropriate level for the students' stage of learning and the teachers'
economic knowledge and teaching proficiency. Doing so would help support economic literacy in
the community and increase engagement with economics, yielding longer-term gains for the health
of the Economics student and teaching body.

The Reserve Bank understands that the inclusion of new quantitative elements in Stage 2 Economics
is designed to enhance the relevance of the subject by providing practical ways in which
students can interpret and assess ‘everyday’ economic events. The Bank does,
however, query whether SACE has interpreted the proposed new elements differently to
practitioners. (Econometrics, for example, has a particular meaning to practitioners that is
likely to exceed the intent of SACE.) If so, this matter could be easily resolved through
different ‘labels’ being assigned to some of the new subject elements. The Bank
welcomes the opportunity to discuss this possibility and work towards a common understanding of
terms, so that the objectives of SACE and the issues raised in this submission can be
reconciled.

2.2 Recommendation

The Reserve Bank supports the intent of the proposed South Australian Economics subject outline
and values the opportunities for consultation. However, the Bank's Educators Advisory Panel
has raised a number of concerns about the subject. Given this, and the Bank's own research
into Economics enrolments at secondary schools, it recommends that SACE reviews the proposed
subject outline so that it better aligns with the conditions required for the effective renewal
of Economics as a field of study in South Australia.

Recommendation:

Clarify the economic concepts to be taught in Stages 1 and 2 of the renewed Economics subject.

Clarify the learning criteria in both Stages.

Refocus the Economics subject outline on foundation knowledge in economics.

Remove econometrics, applied statistics and game theory from Stage 2.

Explore alternative descriptions of the quantitative subject elements so that they better describe the intent of the subject renewal.

Appendix: The Reserve Bank's Public Education Program

The Reserve Bank has recognised the importance of supporting Economics educators and students, as
well as the general public. The Pubic Access & Education team coordinates a program that
includes the elements listed below.

Educators Advisory Panel

The Reserve Bank has established a group of external education experts to provide feedback and
guidance on the Bank's initiatives in support of Economics education. The Panel
comprises presidents of the national and state associations for Economics educators, the
president of the national careers advisory body, two academics and two ‘best practice’
teachers.

Professional Development

Professional development activities for Economics educators have been provided. The annual Teacher Immersion
Event is accredited as Registered Professional Development (addressing 6.2.2, 6.3.2 and
7.4.2 from the Australian Professional Standards for Teachers) towards maintaining Proficient
Teacher Accreditation in New South Wales.

Ambassador Program

An Ambassador Program has been established, with a group of Reserve Bank economists being
equipped to deliver talks to
teachers and students and act as advocates for economics who exemplify what an economist does.

Educational Talks

The Reserve Bank Ambassadors give talks to students and educators on economic concepts, economic
conditions and the roles and functions of the Reserve Bank. These talks are delivered at the
Bank, large forums and conferences, lectures at universities and include incursions to schools.

Resources

Curriculum-relevant content is being developed to meet the needs of Economics educators and
students. It is available on the Education
section of the Bank's website. Current content includes:

Explainers, In a Nutshell, Snapshots – various short guides that contain information
with different levels of detail. They cover key economic concepts, economic developments,
economic statistics and responsibilities of the Reserve Bank.

Videos – videos that explain what economics is and its relevance. In one video
entitled What is Economics?, Bank
economists explain what economics is, the skills that economists use and the issues to which
they are applied. In another entitled The
Future of Work, a senior Bank economist talks about the changing nature of the
Australian workforce and the skills that will be highly valued in the future.

Scholarship

The Reserve Bank sponsors a Premiers' Teaching Scholarship devoted to developing a more inclusive
approach to teaching Economics to women and girls.

The rest of Australia grouping excludes Tasmania, the Northern Territory and the
Australian Capital Territory, for which we were unable to obtain the relevant time
series of Economics enrolments data.
[2]